EXHIBIT 10.1
AMENDED AND RESTATED
LINE OF CREDIT NOTE AND LOAN AGREEMENT
$2,334,375 December 22, 2005
INTERLAND, INC., a Minnesota corporation ("INTERLAND") and WDC HOLDCO, INC., a
Delaware corporation ("SUBSIDIARY" and collectively with Interland, the
"BORROWERS," and each individually, a "BORROWER"), for value received, jointly
and severally, promise to pay WEB SERVICE COMPANY, INC., a California
corporation with a principal address of ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (the "LENDER"), or its order, the aggregate
principal amount of Two Million Three Hundred Thirty-Four Thousand Three Hundred
Seventy-Five Dollars ($2,334,375), in accordance with the terms, conditions and
provisions set forth herein.
This Amended and Restated Line of Credit and Loan Agreement (this "Note") is the
Note referred to in the Intellectual Property Purchase and Sale Agreement dated
as of November 28, 2005 between Borrowers and Lender (the "IP PURCHASE
AGREEMENT"). Pursuant to the IP Purchase Agreement, Borrowers agreed to assume
the liabilities and obligations of Web Internet, LLC ("WEB INTERNET") under a
Line of Credit and Loan Agreement dated as of January 1, 2003 between Lender and
Web Internet, as amended by an Amended Loan Agreement dated as of August 31,
2004 and a First Amendment to Amended Loan Agreement dated as of December 14,
2004 (collectively, as amended and restated hereby and from time to time
hereafter, the "LOAN AGREEMENT"). This Note amends and supersedes the Loan
Agreement.
1. INTEREST RATE. This Note shall bear simple interest at a fixed annual rate of
Three Percent (3.0%).
2. PAYMENTS. The principal balance and accrued interest of this Note shall be
due and payable in the amounts and on or before the dates set forth on Schedule
A to this Note, which schedule is attached hereto and incorporated herein by
reference. Any and all unpaid principal and accrued interest shall be due and
payable on December 1, 2008 (the "MATURITY DATE"). All payments due hereunder
shall be made to the holder of this Note in United States Dollars and shall be
in the form of immediately available funds acceptable to the holder of this
Note.
3. APPLICATION OF PAYMENTS. All payments received by Lender from or for the
account of Borrowers due hereunder shall be applied by Lender in the following
manner:
First: To pay any and all costs, advances, late charges, expenses or fees
due, owing and/or payable to Lender, or paid or incurred by Lender, arising from
or out of this and any and all other instruments, agreements (including the
Pledge and Security Agreement of even date herewith between Borrowers and Lender
(the "SECURITY AGREEMENT") and documents executed in connection with or
otherwise pertaining to this Note;
Second: Payment of any accrued but unpaid interest on the Note; and
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Third: Payment of the outstanding principal balance of this Note.
All records of payments received by Lender shall be maintained at Lender's
address as set forth above, and the records of Lender shall, absent manifest
error, be binding and conclusive upon Borrowers. The failure of Lender to record
any payment or expenses shall not limit or otherwise affect the obligations of
Borrowers under this Note.
4. UNPAID CHARGES AND COSTS; LATE CHARGES.
Borrowers acknowledge that if any payment required under this Note is not
received by Lender within thirty (30) calendar days after the same becomes due
and payable, Lender will incur extra administrative expenses (i.e., in addition
to expenses incident to receipt of timely payment) and the loss of the use of
funds in connection with the delinquency in payment. Because the actual damages
suffered by Lender by reason of such administrative expenses and loss of use of
funds would be impracticable or extremely difficult to ascertain, Borrowers
agrees that five percent (5%) of the amount of the delinquent payment shall be
the amount of damages which Lender is entitled to receive upon such breach, in
compensation therefor. Therefore, Borrowers shall, in such event, without
further demand or notice, pay to Lender, as Lender's monetary recovery for such
extra administrative expenses and loss of use of funds, liquidated damages in
the amount of five percent (5%) of the amount of the delinquent payment. The
provisions of this paragraph are intended to govern only the determination of
damages in the event of a breach in the performance of Borrowers to make timely
payments hereunder. Nothing in this Note shall be construed as in any way giving
Borrowers the right, express or implied, to fail to make timely payments
hereunder, whether upon payment of such damages or otherwise. The right of
Lender to receive payment of such liquidated and actual damages, and receipt
thereof, are without prejudice to the right of Lender to collect such delinquent
payments and any other amounts provided to be paid hereunder, or to declare a
Default hereunder.
5. HOLIDAYS. Whenever any payment to be made under this Note shall be due on a
Saturday, Sunday or legal holiday generally recognized by banks doing business
in California or Georgia, then the due date for such payment shall be
automatically extended to the next succeeding business day.
6. OFFSETS AND DEDUCTIONS. All payments under the Note shall be made by
Borrowers without any offset, decrease, reduction or deduction of any kind or
nature whatsoever, including, but not limited to, any decrease, reduction or
deduction for, or on account of, any offset, withholdings, present or future
taxes, present or future reserves, imposts or duties of any kind or nature,
unless a deduction is required by law.
7. DEFAULT. Any one or more of the following events or occurrences shall
constitute a default under this Note (hereinafter "DEFAULT"):
(a) A failure by the Borrowers to make a payment of the principal or
interest of this Note within ten (10) calendar days after the same
shall become due and payable;
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(b) If Borrowers shall (1) commence any proceeding or other action
relating to it in bankruptcy or seek reorganization, arrangement,
readjustment of its debts, dissolution, liquidation, winding-up,
composition or any other relief under the U.S. Bankruptcy Code, or
under any other insolvency, reorganization, liquidation, dissolution,
arrangement, composition, readjustment of debt or any other similar
act or law, of any jurisdiction; or (2) admit the material allegations
of any petition or pleading in connection with any such proceeding; or
(3) apply for, or consent or acquiesce to, the appointment of a
receiver, conservator, trustee or similar officer for it or for all or
a substantial part of its property; or (4) make a general assignment
for the benefit of creditors; or (5) be unable, or admit in writing
that it is unable, to pay its debts as they mature; or (6) have any of
the foregoing proceedings commenced against it by a third party and
such proceeding or proceedings are not stayed, dismissed or vacated
within thirty (30) days;
(c) The occurrence of an "Event of Default" as defined in the Security
Agreement;
(d) If any representation, warranty or certification made by Borrowers in
the IP Purchase Agreement or the Security Agreement shall prove to be
false or misleading in any material respect; or
(e) If Borrowers shall default in the due observance or performance of any
covenant, condition or agreement to be observed or performed by
Borrowers pursuant to this Note, the IP Purchase Agreement or the
Security Agreement.
Upon the occurrence of a Default hereunder, Lender may, in its sole and absolute
discretion, declare the entire unpaid principal balance, together with all other
amounts and/or payments due hereunder, immediately due and payable, without
notice and/or demand.
8. SECURITY AGREEMENT. The obligations of Borrowers under and pursuant to this
Note are secured by a lien on the Collateral as that term is defined in the
Security Agreement.
9. PREPAYMENT. Borrowers may prepay all or any portion of the principal amount
of this Note without penalty; provided that written notice of prepayment is
received by Lender concurrently therewith.
10. COVENANT NOT TO ▇▇▇. Borrowers, jointly and severally, on behalf of
themselves and all of their respective heirs, successors and assigns, remise,
release, acquit, satisfy and forever discharge Lender or any subsidiary or
affiliate of Lender, and all of the past, present and future officers,
directors, contractors, employees, agents, servicers, attorneys,
representatives, participants, successors and assigns of Lender and Lender's
predecessors in interest (collectively, "LENDER PARTIES") from any and all
manner of debts, accountings, bonds, warranties, representations, covenants,
promises, contracts, controversies, agreements, liabilities, obligations,
expenses, damages, judgments, executions, actions, inactions, claims, demands
and causes of action of any nature whatsoever, at law or in equity, either now
accrued or subsequently maturing, which either Borrower now has or hereafter
can, shall or may have by reason of any matter, cause or thing, from the
beginning of the world to and including the date of this Note arising out of or
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relating to the Loan Agreement and transactions contemplated thereby
(collectively, the "WAIVED CLAIMS"); provided, however, that Borrowers do not
release any of the Lender Parties from any claims that may exist, either in the
past or the future, arising out of or in connection with the representations,
warranties and obligations of the Lender under the IP Purchase Agreement or the
Security Agreement. Borrowers, jointly and severally, for themselves and all of
their respective heirs, successors and assigns, covenant and agree never to
institute or cause to be instituted or continue prosecution of any suit or other
form of action or proceeding of any kind or nature whatsoever against any of the
Lender Parties by reason of or in connection with any of the Waived Claims.
Neither Web Internet nor ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall be considered a Lender Party for
purposes of this Section 10,
11. TIME IS OF THE ESSENCE. Time is of the essence for all payments and other
obligations due under this Note.
12. WAIVERS. Borrowers hereby waives grace, diligence, presentment, demand,
notice of demand, dishonor, notice of dishonor, protest, notice of protest, any
and all exemption rights against the indebtedness evidenced by this Note and the
right to plead any statute of limitations as a defense to the repayment of all
or any portion of this Note to the fullest extent allowed by law, and all
compensation of cross-demands . No failure to exercise, and no delay in
exercising, any right, power or remedy hereunder or under any document delivered
to Lender shall impair any right, power or remedy which Lender may have. The
rights and remedies of Lender are cumulative and not exclusive of any rights or
remedies which Lender would otherwise have.
13. AMENDMENT. No waiver or modification of any of the terms or provisions of
this Note shall be valid or binding unless set forth in a writing signed by
Lender and Borrowers and then only to the extent therein specifically set forth.
14. GOVERNING LAW; JURISDICTION. This Note and all transactions hereunder and/or
evidenced hereby shall be governed by, construed under and enforced in
accordance with the laws of the State of California without giving effect to the
choice of law principles thereof. Borrowers and Lender hereby agree that the
United States District Court for the Central District of California shall be the
preferred choice of forum and shall have jurisdiction over any legal action or
proceeding brought by either party to enforce its rights or obligations under
this Note. Any claim or dispute arising out of this Note shall be resolved by
arbitration in accordance with the applicable provisions of the IP Purchase
Agreement.
15. AUTHORITY. Each Borrower hereby represents and warrants to Lender that, by
its execution below, (i) such Borrower has the full power, authority and legal
right to execute, deliver and perform its obligations under this Note, and (ii)
the indebtedness evidenced hereby constitutes a valid and binding obligation of
such Borrower without exception or limitation.
16. ASSIGNMENT. Neither this Note nor any rights or obligations of Borrowers
hereunder may be assigned without the express written consent of Lender.
Notwithstanding the foregoing, this Note shall be binding upon Borrowers and its
respective heirs, representatives, successors and assigns.
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17. INVALID PROVISIONS. If any one of the provisions of this Note shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
18. ATTORNEYS' FEES. Borrowers hereby agree to pay any and all costs and/or
expenses paid and/or incurred by Lender by reason of, as a result of, or in
connection with, this Note, including, but not limited to, any and all
reasonable attorneys' fees and related costs whether such costs and/or expenses
are paid or incurred in connection with the enforcement of this Note, the
protection and/or preservation of the collateral or security for this Note
and/or any other rights, remedies and/or interests of Lender, whether or not
suit is filed. Borrowers' agreement to pay any and all such costs and expenses
includes, but is not limited to, costs and expenses incurred in enforcing any
judgment obtained by Lender and in connection with any and all appeals
therefrom. All such costs and expenses are immediately due and payable to Lender
by Borrowers, whether or not demand therefor is made by Lender.
IN WITNESS WHEREOF, Borrowers have executed this Note on the day and year
first above written.
BORROWERS:
INTERLAND, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and C.E.O.
WDC HOLDCO, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
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AGREED AND ACCEPTED:
WEB SERVICE COMPANY, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Chairman
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Schedule A
Payment Schedule
PAYMENT
LOAN BALANCE --------------------------------------- LOAN BALANCE
PAYMENT DATE BEGINNING INTEREST PRINCIPAL TOTAL ENDING
1/1/2006 2,334,375.00 5,835.94 62,050.51 67,886.45 2,272,324.49
2/1/2006 2,272,324.49 5,680.81 62,205.64 67,886.45 2,210,118.85
3/1/2006 2,210,118.85 5,525.30 62,361.15 67,886.45 2,147,757.70
4/1/2006 2,147,757.70 5,369.39 62,517.06 67,886.45 2,085,240.64
5/1/2006 2,085,240.64 5,213.10 62,673.35 67,886.45 2,022,567.29
6/1/2006 2,022,567.29 5,056.42 62,830.03 67,886.45 1,959,737.26
7/1/2006 1,959,737.26 4,899.34 62,987.11 67,886.45 1,896,750.15
8/1/2006 1,896,750.15 4,741.88 63,144.57 67,886.45 1,833,605.58
9/1/2006 1,833,605.58 4,584.01 63,302.44 67,886.45 1,770,303.14
10/1/2006 1,770,303.14 4,425.76 63,460.69 67,886.45 1,706,842.45
11/1/2006 1,706,842.45 4,267.11 63,619.34 67,886.45 1,643,223.11
12/1/2006 1,643,223.11 4,108.06 63,778.39 67,886.45 1,579,444.71
1/1/2007 1,579,444.71 3,948.61 63,937.84 67,886.45 1,515,506.88
2/1/2007 1,515,506.88 3,788.77 64,097.68 67,886.45 1,451,409.19
3/1/2007 1,451,409.19 3,628.52 64,257.93 67,886.45 1,387,151.27
4/1/2007 1,387,151.27 3,467.88 64,418.57 67,886.45 1,322,732.69
5/1/2007 1,322,732.69 3,306.83 64,579.62 67,886.45 1,258,153.08
6/1/2007 1,258,153.08 3,145.38 64,741.07 67,886.45 1,193,412.01
7/1/2007 1,193,412.01 2,983.53 64,902.92 67,886.45 1,128,509.09
8/1/2007 1,128,509.09 2,821.27 65,065.18 67,886.45 1,063,443.91
9/1/2007 1,063,443.91 2,658.61 65,227.84 67,886.45 998,216.07
10/1/2007 998,216.07 2,495.54 65,390.91 67,886.45 932,825.16
11/1/2007 932,825.16 2,332.06 65,554.39 67,886.45 867,270.77
12/1/2007 867,270.77 2,168.18 65,718.27 67,886.45 801,552.50
1/1/2008 801,552.50 2,003.88 65,882.57 67,886.45 735,669.93
2/1/2008 735,669.93 1,839.17 66,047.28 67,886.45 669,622.66
3/1/2008 669,622.66 1,674.06 66,212.39 67,886.45 603,410.26
4/1/2008 603,410.26 1,508.53 66,377.92 67,886.45 537,032.34
5/1/2008 537,032.34 1,342.58 66,543.87 67,886.45 470,488.47
6/1/2008 470,488.47 1,176.22 66,710.23 67,886.45 403,778.24
7/1/2008 403,778.24 1,009.45 66,877.00 67,886.45 336,901.24
8/1/2008 336,901.24 842.25 67,044.20 67,886.45 269,857.04
9/1/2008 269,857.04 674.64 67,211.81 67,886.45 202,645.23
10/1/2008 202,645.23 506.61 67,379.84 67,886.45 135,265.40
11/1/2008 135,265.40 338.16 67,548.29 67,886.45 67,717.11
12/1/2008 67,717.11 169.29 67,717.16 67,886.45 (0.05)
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